Jurisprudentiol – Thursday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise

When the issue is pending before High Court and Larger Bench of CESTAT, penalty cannot be demanded from assessee moreso since no mens rea established – CESTAT rejects Revenue appeal.

THIS is a Revenue appeal contending that when the duty demand is confirmed against the assessee, the penalty under section 11AC is mandatory. Inasmuch as the waiver and reduction of penalty by the Commissioner (Appeals) is not proper in law, the Revenue is before the CESTAT.

Income Tax

Sec 194H - Vodafone pushes pre-paid and post-paid SIM Cards through distributors - deducts TDS on commission paid on post-paid but treats pre-paid as sale of good and margins offered on MRP - Once it is held that SIM cards are only to facilitate rendering of service, it cannot treated as sale, and assessee is liable to TDS even on margins which are nothing but commissions: ITAT

FOR the global telecom giant Vodafone, Indian income tax is evidently turning out to be a real Waterloo! Its all meticulous tax planning does not seem to working in its favour. Netizens are well aware of Rs 10,000 Crore capital gains tax liability raised by the Revenue on its share-transfer deal. Here comes another blow where the Tribunal has held that the Vodafone Essar Cellular Ltd is liable to TDS u/s 194H on the margins offered to distributors for pushing pre-paid SIM Cards to ultimate consumers. The assessee has been deducting tax at source in the case of commission paid on distribution of post-paid SIM Cards but it had entered into a different kind of agreement with its distributors for distributing pre-paid SIM Cards whereby it has been providing the SIM to distributors at a discount from the MRP and has not been deducting TDS by treating the same as a sale of goods.

Customs

Redemption - Section 125 of the Act permits authority to redeem goods on payment of fine either to owner or persons in possession. – High Court

Once the goods were freely importable, it is immaterial as to who first sought to import the goods as long as the goods were cleared according to law. Whatever may be the transaction between M/s Leela Scottish Lace P. Ltd. and the three persons who had subsequently cleared the goods, the previous antecedents to evade customs duty, if any, would be irrelevant as long as the goods were finally cleared by the said three persons by payment of duty. Section 125 of the Act permits the authority to redeem the goods on payment of fine either to the owner or the persons in possession.

See our columns Tomorrow for the judgements